Should A Homeowner Get to Live for Free?
As a passionate defender of homeowners in foreclosure, I am occasionally asked by opponents, “So you think the homeowner should be able to walk away from their mortgage…how is that fair, they borrowed the money?” The answer to the question is a loud “No”.
Lenders Just Don’t Care
I spend a good deal of time with my clients counseling them about the consequences of foreclosure, the risk of deficiency judgments, damaged credit and other factors. I also require that every single client keep up regular and frequent communication with their lender and keep a notebook of every call they make, what was said and what documents were sent or received. Before a judge is going to consider entering foreclosure, I want that judge to see that my client was working hard to negotiate a solution with the lender. The vast majority of my clients can, and want to make a mortgage payment. They can and are prepared to make somewhere like 60-90% of the full payment that is due or they would like to sell the property on terms that would usually net the lender something like 60-90% of the amount due.
Lenders Are Either Colossally Inept (all of them) or They Just Don’t Want to Work with Homeowners
When I started working with consumers at the beginning of the foreclosure crisis, clients would assure me they were trying to get in contact with their lender but could not. At first, like many judges I didn’t believe them. In a very short time and after I began reviewing my clients detailed contact notes, I came to understand that the lenders either cannot or do not want to work out with borrowers.
Some lenders are worse than others and I am aware of a handful of clients who have received short term modifications or acceptable short sales, but the magnitude and scope of lender ineptitude and inability to work with consumers is staggering. I represent hundreds of individuals in foreclosure and my strategy is not to delay indefinitely….most of my clients either want to stay in the home and pay or they want to help the lender sell the home and have negotiated an acceptable short sale or would consent to a deed in lieu. When the lenders will not work with consumers at all and when it becomes widely accepted among realtors, title companies, consumers and attorneys that trying to negotiate a solution is a waste of time, the system will just break down further.
Lenders- Being Paid To Care Then Ignoring Consumers
As part of its broader efforts to address issues related to the foreclosure crisis, the federal government has paid bajillions of dollars to the lenders and servicers According to one site, only 611,000 trial modifications have been processed by lenders. Article here. The Government Accountability Office (Ha Ha I just get a kick everytime I read those three words together) reports that the federal government has budgeted $50 billion dollars to pay lenders for modifications but…
“concerns have been raised by Treasury, the Congressional Oversight Panel, and federal banking regulators about servicers’ capacity to fulfill program requirements and implement HAMP. Because servicers are not fully evaluated during the admittance process, Treasury is unable to adequately identify, assess, and address any potential risks that may prevent them from fulfilling program requirements.”
(In layman terms, what all that says is “Taxpayers are paying the lenders who caused all these problems $50 billion dollars, but we know with absolutely certainty that we have know way of tracking where the money is going or how they are blowing it.”)
We’re all paying big, big money for this crisis and the only ones that appear to be profiting from it are the banks, servicers and lenders that caused the mess in the first place….until the system changes and the bad actors start acting right foreclosure defense attroneys and consumers need to continue the fight to start leveling the playing field and force accountability. Taxpayers have already paid for their modification. The lenders cashed the checks and shoved the cash in their own pockets…it’s time to wring that cash out and provide it to the consumers who paid for the relief.